In order to understand how we ended up in this state it’s useful to look back a hundred years and understand how the electric grid evolved.

Supply-side focus

A hundred years ago electricity was produced by the pounding of reciprocating steam engines and then distributed at a trickle down copper wires. Both generation and distribution were horribly inefficient, and the power could only be delivered a few miles from its source.

This early grid was transformed into the one we know today by two primary inventions: the steam turbine and the alternating current. Together they entirely changed the electric grid and the expectations we have of it.

The steam turbine is far more efficient than the reciprocating engine and, moreover, its efficiency improves with size. Alternating currents can be transformed to hundreds of thousands of volts before transmission, allowing power to be delivered to homes many miles away.

In conjunction, turbines and alternating current allowed for huge economies of scale. The steam turbines grew to huge size, serving power to homes and businesses far afield through high-voltage alternating currents. The grid evolved into a series of hubs and spokes, with centralized power plants radiating power to homes and businesses far afield.

Even Obama is impressed by the size of a modern day steam turbine.

Disengaged customers

The hubs and spokes were built to provide power to anybody, anywhere, at anytime. Innovation was furious, and electricity prices fell so fast it was even suggested that electricity would ultimately be ‘too cheap to meter’. For the best part of a century, the brightest minds in the industry focused on scaling hub and spokes.

In this paradigm, customers were of secondary consideration. Billing was regarded as a nuisance that could be handled approximately. In fact, not only were customers purposefully disengaged from the process of generation, they were actively encouraged to consume indiscriminately by rate plans that tapered as the load grew.

Relentless focus on the supply-side caused electricity prices to plummet.

Broken grid

The current grid is challenged by widespread renewables in many ways.

Firstly, with solar installed a house becomes a generator as well as a consumer of power, so the flow of electricity is no longer just from hub to spoke. Moreover, the importance of the hub is somewhat diminished by the extra generation capacity at the edge.

Secondly, the variable output of renewables vastly complicates the task of balancing supply and demand on the grid. No longer will it be enough to fine tune a steam turbine, or schedule extra generation from gas-powered plants. Far more flexibility will be required.

Thirdly, though they could greatly help in the task of balancing supply and demand, customers have been disengaged for far too long to be of much use. Though renewables cannot provide energy to anybody, anywhere, at anytime, customers will continue to demand this of their utilities until they have been reengaged.

Slow but unavoidable change

Changing the grid will be vast task, somewhat akin to changing the engine of a car as it barrels down the freeway. The organizations in question service many millions of customers, and maintain expensive infrastructure with operating lifetimes that are measured in decades.

And yet the current grid is broken at a very fundamental level. Slow as they may be, large changes are unavoidable.